Will the FTC block a Kroger-Albertsons merger? We could know by Friday

Kroger is about to hit a milestone in a plan it made public 14 months ago to buy its largest competitor.

Kroger told the Federal Trade Commission on Nov. 15 that it believed it had met all the antitrust law requirements to move ahead with its proposed $24.6 billion acquisition of Albertsons. That started a 30-day clock for a response from the FTC which is expected to come today.

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Federal regulators can agree with Kroger and let the merger proceed next year, ask Kroger to go back to meet additional requirements or ask a federal court to block the deal. The Teamsters union and members of Congress have asked the FTC to reject the merger of the two largest U.S. supermarket chains to create a food retailer almost as big as Walmart, the largest U.S. grocer.

Kroger CEO Rodney McMullen told investors on a call earlier this month that the company had submitted to the FTC completed compliance work that included a deal to sell 413 stores, including 26 in Texas and two in Louisiana, to C&S Wholesale Grocers. Keene, N.H.-based C&S is a large food distributor to grocery stores and it franchises the Piggly Wiggly brand. Of the more than 500 Piggly Wiggly stores, only a dozen are corporate stores owned by C&S, which may raise concern with the FTC about C&S’s capabilities to take on hundreds of additional stores.

The merger would weaken competition in the grocery business, U.S. Senators Elizabeth Warren, Mazie Hirono, Bernie Sanders, Cory Booker and Alexandria Ocasio-Cortez said in a letter dated Monday to FTC Chair Lina Kahn. The plan to divest stores to C&S “will not ameliorate harms to consumers, workers and the grocery industry as a whole if the merger is allowed,” the letter said.

The Senators pointed to the 2015 Albertsons acquisition of Safeway that was approved by the FTC after the companies agreed to sell 168 of their stores to four buyers. They called that settlement an “unmitigated failure” after buyers ended up bankrupt and closed stores including several in Dallas-Fort Worth. Kroger has already spent $222 million, $203 million this year and $19 million in 2022, on lawyers, bankers and loan fees associated with the pending deal, according to its third-quarter earnings release.

McMullen again told investors this month that C&S is a “well-qualified buyer who meets all the criteria necessary to complete our transaction and will ensure no stores will close as a result of the merger.”

Store employees will remain employed and existing bargaining agreements will continue, Kroger and Albertsons will be able to lower prices for consumers and increase wages and benefits for workers.

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